Tsakloglou: Direct Impact on Greek Economy from Middle East Conflict

The global economy is currently facing unprecedented levels of uncertainty due to trade wars and geopolitical tensions, such as the conflict in the Middle East and U.S. tariffs. Professor at the Athens University of Economics and member of the Bank of Greece, Tsakloglou, spoke to ERT News about the challenges facing Greece, emphasizing that international developments directly and indirectly affect the Greek economy. He noted, ‘The Greek economy is not an island disconnected from the rest of the world. We are interconnected with it, and therefore we are certainly affected by all these factors.’ Regarding the trajectory of the Greek economy amidst intense geopolitical turmoil and specifically the Trump tariffs, he commented that ‘our direct trade exposure with the U.S. is relatively small, so the direct impacts will not be very significant for the Greek economy.’ However, indirect effects, such as reduced demand for Greek products and services, are significant. Tsakloglou also discussed potential consequences from the crisis in the Middle East, stating, ‘There are various scenarios with different impacts on the global economy depending on the duration and events of the crisis. For example, U.S. involvement or the closure of the Strait of Hormuz would have very different consequences.’ On the risk of Iran closing the passage of ships through the Strait of Hormuz for the global energy market, he said, ‘About 20% of global oil and gas exports pass through the Strait of Hormuz. If this is disrupted, it could have chain reactions affecting not only energy but also production costs and consumer prices.’ He emphasized the importance of adaptability in economic policy, noting, ‘Economic policy planning isn’t based on optimistic scenarios; it’s about considering all possible scenarios.’ Greece, like other countries, must be prepared to handle even the most adverse possibilities. Regarding the absorption of funds from the Recovery Fund, Tsakloglou mentioned, ‘Compared to other European countries, we are in a fairly good position, above the European average in both absorption and milestone achievement. However, this doesn’t mean we should relax, as this is the first time a program has such a strict timeline.’